I seem to be writing a lot of these What the heck was that? columns explaining recent news events. This time it is the firing of Carol Bartz as CEO of Yahoo. I’m not here to defend Bartz, whom I would have fired long ago (or more probably not hired in the first place), but I want to make the point that for all her failings, Bartz was mainly fired for being a hardass. It’s not what she did or didn’t do as much as her style while doing it.
Carol Bartz is, like beer, an acquired taste. I like her, but she has a long history of bothering sensitive geeks. The old-timers at Autodesk (a very geeky company where she was CEO) absolutely hated Bartz for her brusque style.
Some of this was casting. Remember Bartz was hired specifically to be not Jerry Yang, the Yahoo co-founder who preceded her as CEO. Jerry has a brusqueness of his own, but his brusqueness is on behalf of the geeks, since he comes from their ranks. To be different from Jerry yet also turn the company around pretty much required that Bartz piss-off nearly everyone, which she gleefully did. If the company was doing better business-wise, she’d still be getting away with it. But over the long haul Bartz came to be seen inside as a pain-in-the-ass who also wasn’t delivering.
Some people will ask whether Bartz would have been fired with the same style and performance had she been a man? I think that had she been a man she wouldn’t have been hired in the first place, so the broader question is moot.
So what happens now for Yahoo? While it will be pitched differently than this, I expect the second coming of Jerry Yang. Jerry can’t be CEO again (or shouldn’t — he’s smarter than to try that) but the real power still lies with he and his cronies. They’ll choose somebody to take the CEO job but I think the company will be run more by consensus. Jerry’s a smart guy and he learns from his mistakes. But will it be enough to satisfy Wall Street? I don’t know.
For all Yahoo’s problems, this is the part of the show where I point out that Wall Street is really, really stupid about how tech companies should be managed. Analysts tend to take a structural approach, looking at inputs and outputs and cash flows like Yahoo or any of its competitors are manufacturing those electrons on assembly lines. It doesn’t work that way.
I’ve written about this many times over the years. These are companies built purely on intellect — companies where there are a few individuals who are capable of doing things that are unique in their enterprise. Imagine a General Motors where there was only one worker who could make really fine exhaust systems. That wouldn’t work in Detroit but it does work in Silicon Valley because the output of that one person can be amplified a thousand or a million times.
Look at Google and its acquisitions, for example. Google notoriously buys companies only to discard their products. This is clearly because Google is acquiring the people for their potential. Yet analysts wring their hands over the lost products as though that was what really mattered and the acquisitions had somehow failed. The truth is the products were inconsequential all along.
Are some individual contributors worth $100 million? Yes, though Wall Street gets that backward, too, thinking CEOs are worth that kind of money, which they aren’t.
Back to Yahoo, a distracted, demoralized, and not very efficient company. But at this point bringing-in a manager with the goal of increasing efficiency would I think be a mistake. People don’t get this. What Yahoo needs to do is dig deep in the human resources it already has and pull out something new that will change the game. And to do that the first thing the company needs to do is heal.
Next time around whoever runs Yahoo will have to be much more sensitive to cultural issues. They will want someone who can unite the company and create a more aspirational firm that looks to innovate and be forward thinking, yet also not trapped by the Jerry Yang syndrome of risk avoidance. Yahoo needs a bit of risk-taking at this point, but it would be a mistake to hire someone who comes in with the idea of making the company a more efficient machine.